Cathie Wood, CEO of Ark Invest, stated that cryptocurrencies acted as a safe haven in the midst of the ongoing SVB, and banking crisis in the United States.
Cathie Wood attributed the recent demise of companies like Silicon Valley Bank (SVB), Signature, and others to the Federal Reserve’s policy failure.
As a result of the US banking crisis, the prices of cryptocurrencies increased by double digits, with Bitcoin and Ether ETH reaching multi-month highs.
Wood blasted the Federal Reserve’s inability to prevent bank runs despite several warning flags in a March 16 tweet thread. She remarked that she was “amazed that banks and regulators were unable to persuade the Federal Reserve that a catastrophe was imminent.”
As there was a shortage of venture capital investment, she argued that the Fed’s stance was primarily responsible for the prolonged financial crisis.
With deposits leaving the banking system for the first time since the 1930s, the asset-liability mismatch, which is normal for banks in ordinary circumstances, was unacceptable in the current environment.
As deposits began to leave the system, banks’ securities earnings of 1% to 2% compared to deposit yields of 3% to 5% eventually proved untenable. As was the case with SVB, a number of banks were compelled to sell HTM securities, incurring losses that drained their equity holdings.
In addition, she reminded everyone that the current crisis was not caused by cryptocurrencies, as the ecosystem has been under intense scrutiny since FTX’s demise, resulting in a major regulatory crackdown. Wood asserted that regulators exploit crypto as a scapegoat for their oversight deficiencies in traditional banking.
Wood has been a crypto advocate for a long time, and her company’s investments in emerging areas, especially crypto, frequently reflect this. She remarked that the banking crisis would not have been conceivable within the decentralized, transparent, auditable, and overcollateralized crypto asset ecosystem.
Wood envisioned cryptocurrencies as a remedy for the old financial system’s central points of failure, opaqueness, and regulatory errors. As a result of being made the scapegoat for policy failures, crypto will relocate abroad, depriving the United States of one of the most significant innovations in history.
